Make sure you’re prepared for personnel issues

men talking to one another
Photo by Martin Barraud/Getty Images

Like any business, community banks run into scenarios involving disciplining or even letting go of employees due to errors or inappropriate workplace behavior. Here’s what experts say to do in these often difficult situations, while also staying compliant.

By Bridget McCrea

Managers at any business, community banks included, understand that disciplining employees comes with the territory, but that doesn’t make the act of identifying, disciplining and even letting people go any easier. By developing an employee disciplinary policy and ensuring that all team members understand how it works and what happens when a rule is broken, community banks can cultivate a more transparent and productive workplace.

In most cases, the onus is on the bank to take this step. With no U.S. federal laws specifically governing employee discipline, organizations have leeway in developing their own policies.

And while the Worker Adjustment and Retraining Notification Act (for companies with 100 or more employees), the National Labor Relations Law (for unionized employees) and certain age discrimination and civil rights laws may come into play, it’s generally up to the bank to lay out the framework for its own employee disciplinary policy.


Be consistent and predictable

Jim Marco, president and principal consultant at Gansevoort, N.Y.-based Saratoga Human Resources Solutions, Inc., says a good disciplinary policy must be consistent and apply to all employees regardless of rank, age, ethnicity or other factors.

“When you have a written policy that ensures that everyone is treated the same, you can avoid a potential discrimination charge,” Marco says. “In other words, the same rules that apply to the 35-year-old white male better also apply to the 40-year-old pregnant female who is a disabled veteran.”

Marco says community banks can avoid singling out certain employees by establishing written discipline policies that all staff (both new and existing) must read and acknowledge with a signature. For example, if a teller’s drawer is short a number of dollars once, a written warning will be issued. If it happens again, the employee is suspended for a certain number of days. And if it happens a third time, they will be dismissed immediately.

“By treating people consistently and applying the same rules to everyone,” Marco says, “banks can avoid risk in this area of human resources.”


Performance over punishment

Many companies focus on performance management rather than discipline. Brooke Pancoe is senior vice president and director of human resources for the Glens Falls, N.Y.-based Arrow Financial Corporation, which includes Glens Falls National Bank and Trust Company, Saratoga National Bank and Trust Company, and Upstate Agency, LLC. The group of banks, which has combined assets of nearly $3.7 billion, takes a positive approach, acknowledging that discipline is often associated with punishment.

“Because we’re committed to continuous improvement, we’re always on the lookout for workforce trends and doing what we can to correct issues before they turn into real problems.”

—Brooke Pancoe, Arrow Financial Corporation

“We want what’s best for our employees and we want them to succeed, but we also have a responsibility to protect our organization and our other employees,” Pancoe says.

To achieve that balance, the bank holding company sets early and clear expectations for roles and responsibilities. It also uses a “coaching” approach between supervisors and employees, she adds.

A workplace compliance resource

The Workplace Compliance bundle from ICBA’s Community Banker University includes courses on more than 50 topics, such as discharging an employee and cross-cultural training.

Arrow Financial Corporation has documented general guidelines for performance expectations that it shares with all new hires as part of its onboarding process. “We also provide educational materials to our supervisors and managers to help everyone get on the same page,” Pancoe says.

When discipline is deemed necessary, and if the coaching proves insufficient, the group’s community banks lay out a more formal disciplinary process. All interactions and steps are documented carefully to avoid potential discrimination issues or complaints, with everything reviewed by a human resources business partner before being shared with the employee.

Throughout the process, Pancoe says, transparency and open communication are paramount. “We don’t want employees to be blindsided if it gets to the point where we need to part ways; the team members shouldn’t be surprised,” she adds.

Arrow Financial Corporation’s banks use scorecards for performance improvement plans and review them monthly. Those reviews are an opportunity to proactively address opportunities for training or repositioning employees.

“Because we’re committed to continuous improvement,” Pancoe says, “we’re always on the lookout for workforce trends and doing what we can to correct issues before they turn into real problems.”


Best practices to follow

Having an established employee disciplinary policy in place makes good sense for an organization, but it’s becoming increasingly important in today’s business world. “We live in an increasingly litigious society,” Marco says.

“Be willing to listen to their side of the story, which may or may not have a bearing on how you approach the ultimate solution.”

—Jim Marco, Saratoga Human Resources Solutions, Inc.

The more processes, information and background that your community bank has documented, the better off it will be if it needs to defend itself against a claim. “If someone from the state or federal government shows up and says, ‘Jim Marco filed a report for unfair treatment or discrimination,’” Marco says, “you had better have the documentation, policies and investigative information on hand to be able to prove otherwise.”

Ignore this advice at your own peril, says Marco, who has found most state governments tend to side with employees. “Write it down, be consistent and be clear, if you want to have a very effective defense.” Marco tells community banks to look for “teachable moments,” or those times when additional coaching, mentoring, and/or support can help employees address and correct issues before they snowball into larger problems—or even dismissal—down the road. Like Pancoe, he also advocates for a proactive approach centered on employee development versus reactive punishments.

“Be willing to listen to their side of the story, which may or may not have a bearing on how you approach the ultimate solution,” Marco says, “understanding, of course, that there may be a good explanation as to why they did what they did.”

Finally, Marco tells community banks to develop a thorough and compliant employee handbook outlining all policies and procedures, including equal employment opportunity (EEO), sexual harassment, attendance, paid time off, hours of work and how to call in sick, to name just a few essentials.

“All of these things, plus your disciplinary policy,” he says, “should be in your employee handbook.”

7 levels of employee discipline

Michael Provitera, executive leadership trainer and president of Motivational Leadership Training in Fort Lauderdale, says community banks can use this seven-step approach as a progressive disciplinary template.

  1. Start with an informal talk about what is going on that stands out and needs to be addressed. Focus on core points.
  2. Give a verbal warning to the employee about their actions or behavior.
  3. If the problem continues, use verbal counseling. At this point, you’ll also want to have a one-on-one conversation with the employee, possibly with a second person present to ensure compliance.
  4. Next, you would issue a written warning to the team member (such as “I am going to have to write you up”). This used to be called a pink slip.
  5. If the problem doesn’t get resolved after these four steps, then the next step may need to be a disciplinary layoff or suspension. If this is the case, consider involving security in the process to protect coworkers and ensure a safe process.
  6. At this point, a transfer or demotion may be in order. “Consider this a last-ditch effort to save an employee’s career,” Provitera says.
  7. If all else fails, a strategic decision will have to made to terminate the employee. The team member should then be told when that termination is effective, whether it’s immediate, in two weeks, etc.

By the time the first six steps have been crossed off the list, Provitera says, the employee should not be surprised to receive a termination letter. “When you let someone go, it’s usually a mutual problem and shouldn’t come as a surprise,” he adds. “Even [former General Electric CEO] Jack Welch—who famously lets go of the bottom 10% of GE’s employees every year—says that when you’re letting go of someone and they don’t know why, then you’ve failed as a leader.”

Bridget McCrea is a writer in Florida.